Professional Documents
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Sarona V NLRC
Sarona V NLRC
Supreme Court
Manila
SECOND DIVISION
TIMOTEO H. SARONA,
Petitioner, G.R. No.
185280
- versus - Present:
CARPIO, J.,
Chairperson,
NATIONAL LABOR RELATIONS PEREZ,
COMMISSION, ROYALE SECURITY SERENO,
AGENCY (FORMERLY SCEPTRE REYES, and
SECURITY AGENCY) and BERNABE, JJ.
CESAR S. TAN,
Respondents.
Promulgated:
x-----------------------------------------------------------------------------------------x
DECISION
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from the
May 29, 2008 Decision1 of the Twentieth Division of the Court of Appeals (CA)
in CA-G.R. SP No. 02127 entitled “Timoteo H. Sarona v. National Labor
Relations Commission, Royale Security Agency (formerly Sceptre Security
Agency) and Cesar S. Tan” (Assailed Decision), which affirmed the National
Labor Relations Commission’s (NLRC) November 30, 2005 Decision and
January 31, 2006 Resolution, finding the petitioner illegally dismissed but limiting
the amount of his backwages to three (3) monthly salaries. The CA likewise
affirmed the NLRC’s finding that the petitioner’s separation pay should be
computed only on the basis of his length of service with respondent Royale
Security Agency (Royale). The CA held that absent any showing that Royale is a
mere alter ego of Sceptre Security Agency (Sceptre), Royale cannot be compelled
to recognize the petitioner’s tenure with Sceptre. The dispositive portion of the
CA’s Assailed Decision states:
SO ORDERED. 2
Factual Antecedents
On June 20, 2003, the petitioner, who was hired by Sceptre as a security
guard sometime in April 1976, was asked by Karen Therese Tan (Karen),
Sceptre’s Operation Manager, to submit a resignation letter as the same was
supposedly required for applying for a position at Royale. The petitioner was also
asked to fill up Royale’s employment application form, which was handed to him
by Royale’s General Manager, respondent Cesar Antonio Tan II (Cesar).3
On September 17, 2003, the petitioner was informed that his assignment at
WWWE, Inc. had been withdrawn because Royale had allegedly been replaced by
another security agency. The petitioner, however, shortly discovered thereafter
that Royale was never replaced as WWWE, Inc.’s security agency. When he
placed a call at WWWE, Inc., he learned that his fellow security guard was not
relieved from his post.5
In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez)
ruled in the petitioner’s favor and found him illegally dismissed. For being
unsubstantiated, LA Gutierrez denied credence to the respondents’ claim that the
termination of the petitioner’s employment relationship with Royale was on his
accord following his alleged employment in another company. That the petitioner
was no longer interested in being an employee of Royale cannot be presumed
from his request for a certificate of employment, a claim which, to begin with, he
vehemently denies. Allegation of the petitioner’s abandonment is negated by his
filing of a complaint for illegal dismissal three (3) days after he was informed that
he would no longer be given any assignments. LA Gutierrez ruled:
Aside from lack of proof showing that complainant has abandoned his
employment, the record would show that immediate action was taken in order
to protest his dismissal from employment. He filed a complaint [for] illegal
dismissal on October 4, 2004 or three (3) days after he was dismissed. This
act, as declared by the Supreme Court is inconsistent with abandonment, as
held in the case of Pampanga Sugar Development Co., Inc. vs. NLRC, 272
SCRA 737 where the Supreme Court ruled:
It may be true that the place where respondent Royale hold (sic)
office is the same office formerly used by “SCEPTRE.” Likewise, it may be
true that the same officers and staff now employed by respondent Royale
Security Agency were the same officers and staff employed by “SCEPTRE.”
We find, however, that these facts are not sufficient to justify to require
respondent Royale to answer for the liability of Sceptre, which was owned
solely by the late Roso T. Sabalones. As we have stated above, the remedy is
to address the claim on the estate of Roso T. Sabalones.8
1. Backwages - [P]15,600.00
2. Separation Pay - 5,200.00
3. 13th Month Pay - 583.34
[P]21,383.34 Attorney’s Fees- 2,138.33
Total [P]23,521.67
The appeal of respondent Royal (sic) Security Agency is hereby
DISMISSED for lack of merit.
SO ORDERED.10
Backwages:
The petitioner, on the other hand, did not appeal LA Gutierrez’s May 11, 2005
Decision but opted to raise the validity of LA Gutierrez’s adverse findings with
respect to piercing Royale’s corporate personality and computation of his
separation pay in his Reply to the respondents’ Memorandum of Appeal. As the
filing of an appeal is the prescribed remedy and no aspect of the decision can be
overturned by a mere reply, the NLRC dismissed the petitioner’s efforts to reverse
LA Gutierrez’s disposition of these issues. Effectively, the petitioner had already
waived his right to question LA Gutierrez’s Decision when he failed to file an
appeal within the reglementary period. The NLRC held:
Consequently, the petitioner elevated the NLRC’s November 30, 2005 Decision to
the CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court.
On the other hand, the respondents filed no appeal from the NLRC’s finding that
the petitioner was illegally dismissed.
Therefore, for full adjudication of the case, We have to primarily resolve the
issue of whether the doctrine of piercing the corporate veil be justly applied
in order to determine petitioner’s length of service with private respondents.15
(citations omitted)
Nonetheless, the CA ruled against the petitioner and found the evidence he
submitted to support his allegation that Royale and Sceptre are one and the same
juridical entity to be wanting. The CA refused to pierce Royale’s corporate mask
as one of the “probative factors that would justify the application of the doctrine
of piercing the corporate veil is stock ownership by one or common ownership of
both corporations” and the petitioner failed to present clear and convincing proof
that Royale and Sceptre are commonly owned or controlled. The relevant portions
of the CA’s Decision state:
Petitioner, who has been with Sceptre since 1976 and, as ruled by both
the Labor Arbiter and the NLRC, was illegally dismissed by Royale on
October 1, 2003, alleged that in order to circumvent labor laws, especially to
avoid payment of money claims and the consideration on the length of
service of its employees, Royale was established as an alter ego or business
conduit of Sceptre. To prove his claim, petitioner declared that Royale is
conducting business in the same office of Sceptre, the latter being owned by
the late retired Gen. Roso Sabalones, and was managed by the latter’s
daughter, Dr. Aida Sabalones-Tan; that two of Royale’s incorporators are
grandchildren [of] the late Gen. Roso Sabalones; that all the properties of
Sceptre are now owned by Royale, and that the officers and staff of both
business establishments are the same; that the heirs of Gen. Sabalones should
have applied for dissolution of Sceptre before the SEC before forming a new
corporation.
On the other hand, private respondents declared that Royale was
incorporated only on March 10, 2003 as evidenced by the Certificate of
Incorporation issued by the SEC on the same date; that Royale’s
incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen Therese
S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K. Tan.
By way of this Petition, the petitioner would like this Court to revisit the
computation of his backwages, claiming that the same should be computed from
the time he was illegally dismissed until the finality of this decision.17 The
petitioner would likewise have this Court review and examine anew the factual
allegations and the supporting evidence to determine if the CA erred in its refusal
to pierce Royale’s corporate mask and rule that it is but a mere continuation or
successor of Sceptre. According to the petitioner, the erroneous computation of
his separation pay was due to the CA’s failure, as well as the NLRC and LA
Gutierrez, to consider evidence conclusively demonstrating that Royale and
Sceptre are one and the same juridical entity. The petitioner claims that since
Royale is no more than Sceptre’s alter ego, it should recognize and credit his
length of service with Sceptre.18
The petitioner claimed that Royale and Sceptre are not separate legal
persons for purposes of computing the amount of his separation pay and other
benefits under the Labor Code. The piercing of Royale’s corporate personality is
justified by several indicators that Royale was incorporated for the sole purpose of
defeating his right to security of tenure and circumvent payment of his benefits to
which he is entitled under the law: (i) Royale was holding office in the same
property used by Sceptre as its principal place of business;19 (ii) Sceptre and
Royal have the same officers and employees;20 (iii) on October 14, 1994, Roso,
the sole proprietor of Sceptre, sold to Aida, and her husband, Wilfredo Gracia K.
Tan (Wilfredo),21 the property used by Sceptre as its principal place of business;22
(iv) Wilfredo is one of the incorporators of Royale;23 (v) on May 3, 1999, Roso
ceded the license to operate Sceptre issued by the Philippine National Police to
Aida;24 (vi) on July 28, 1999, the business name “Sceptre Security & Detective
Agency” was registered with the Department of Trade and Industry (DTI) under
the name of Aida;25 (vii) Aida exercised control over the affairs of Sceptre and
Royale, as she was, in fact, the one who dismissed the petitioner from
employment;26 (viii) Karen, the daughter of Aida, was Sceptre’s Operation
Manager and is one of the incorporators of Royale;27 and (ix) Cesar Tan II, the
son of Aida was one of Sceptre’s officers and is one of the incorporators of
Royale.28
In their Comment, the respondents claim that the petitioner is barred from
questioning the manner by which his backwages and separation pay were
computed. Earlier, the petitioner moved for the execution of the NLRC’s
November 30, 2005 Decision29 and the respondents paid him the full amount of
the monetary award thereunder shortly after the writ of execution was issued.30
The respondents likewise maintain that Royale’s separate and distinct corporate
personality should be respected considering that the evidence presented by the
petitioner fell short of establishing that Royale is a mere alter ego of Sceptre.
The petitioner does not deny that he has received the full amount of
backwages and separation pay as provided under the NLRC’s November 30, 2005
Decision.31 However, he claims that this does not preclude this Court from
modifying a decision that is tainted with grave abuse of discretion or issued
without jurisdiction.32
ISSUES
OUR RULING
In Leonis Navigation Co., Inc., et al. v. Villamater, et al.,34 this Court ruled
that the prevailing party’s receipt of the full amount of the judgment award
pursuant to a writ of execution issued by the labor arbiter does not
close or terminate the case if such receipt is qualified as without prejudice to the
outcome of the petition for certiorari pending with the CA.
The finality of the NLRC’s decision does not preclude the filing of a
petition for certiorari under Rule 65 of the Rules of Court. That the NLRC issues
an entry of judgment after the lapse of ten (10) days from the parties’ receipt of its
decision36 will only give rise to the prevailing party’s right to move for the
execution thereof but will not prevent the CA from taking cognizance of a petition
for certiorari on jurisdictional and due process considerations.37 In turn, the
decision rendered by the CA on a petition for certiorari may be appealed to this
Court by way of a petition for review on certiorari under Rule 45 of the Rules of
Court. Under Section 5, Article VIII of the Constitution, this Court has the power
to “review, revise, reverse, modify, or affirm on appeal or certiorari as the law or
the Rules of Court may provide, final judgments and orders of lower courts in x x
x all cases in which only an error or question of law is involved.” Consistent with
this constitutional mandate, Rule 45 of the Rules of Court provides the remedy of
an appeal by certiorari from decisions, final orders or resolutions of the CA in
any case, i.e., regardless of the nature of the action or proceedings
involved, which would be but a continuation of the appellate process over the
original case.38 Since an appeal to this Court is not an original and independent
action but a continuation of the proceedings before the CA, the filing of a petition
for review under Rule 45 cannot be barred by the finality of the NLRC’s decision
in the same way that a petition for certiorari under Rule 65 with the CA cannot.
Furthermore, if the NLRC’s decision or resolution was reversed and set aside for
being issued with grave abuse of discretion by way of a petition for certiorari to
the CA or to this Court by way of an appeal from the decision of the CA, it is
considered void ab initio and, thus, had never become final and executory.39
As a general rule, this Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions
of law. Moreover, if factual findings of the NLRC and the LA have been affirmed
by the CA, this Court accords them the respect and finality they deserve. It is
well-settled and oft-repeated that findings of fact of administrative agencies and
quasi-judicial bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only respect, but finality
when affirmed by the CA. 41
Nevertheless, this Court will not hesitate to deviate from what are clearly
procedural guidelines and disturb and strike down the findings of the CA and
those of the labor tribunals if there is a showing that they are unsupported by the
evidence on record or there was a patent misappreciation of facts. Indeed, that the
impugned decision of the CA is consistent with the findings of the labor tribunals
does not per se conclusively demonstrate the correctness thereof. By way of
exception to the general rule, this Court will scrutinize the facts if only to rectify
the prejudice and injustice resulting from an incorrect assessment of the evidence
presented.
A resolution of an issue that has
supposedly become final and executory
as the petitioner only raised it in his
reply to the respondents’ appeal may be
revisited by the appellate court if such
is necessary for a just disposition of the
case.
In this respect, the NLRC cannot be accused of grave abuse of discretion. Under
Section 4(c), Rule VI of the NLRC Rules,42 the NLRC shall limit itself to
reviewing and deciding only the issues that were elevated on appeal. The NLRC,
while not totally bound by technical rules of procedure, is not licensed to
disregard and violate the implementing rules it implemented. 43
Hence, any application of the doctrine of piercing the corporate veil should
be done with caution. A court should be mindful of the milieu where it is to be
applied. It must be certain that the corporate fiction was misused to such an extent
that injustice, fraud, or crime was committed against another, in disregard of
rights. The wrongdoing must be clearly and convincingly established; it cannot be
presumed. Otherwise, an injustice that was never unintended may result from an
erroneous application.47
Whether the separate personality of the corporation should be pierced
hinges on obtaining facts appropriately pleaded or proved. However, any piercing
of the corporate veil has to be done with caution, albeit the Court will not hesitate
to disregard the corporate veil when it is misused or when necessary in the interest
of justice. After all, the concept of corporate entity was not meant to promote
unfair objectives.48
The doctrine of piercing the corporate veil applies only in three (3) basic
areas, namely: 1) defeat of public convenience as when the corporate fiction is
used as a vehicle for the evasion of an existing obligation; 2) fraud cases or when
the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or
3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego
or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another
corporation.49
In this regard, this Court finds cogent reason to reverse the CA’s findings.
Evidence abound showing that Royale is a mere continuation or successor of
Sceptre and fraudulent objectives are behind Royale’s incorporation and the
petitioner’s subsequent employment therein. These are plainly suggested by
events that the respondents do not dispute and which the CA, the NLRC and LA
Gutierrez accept as fully substantiated but misappreciated as insufficient to
warrant the use of the equitable weapon of piercing.
Aida’s control over Sceptre and Royale does not, by itself, call for a
disregard of the corporate fiction. There must be a showing that a fraudulent intent
or illegal purpose is behind the exercise of such control to warrant the piercing of
the corporate veil.52 However, the manner by which the petitioner was made to
resign from Sceptre and how he became an employee of Royale suggest the
perverted use of the legal fiction of the separate corporate personality. It is
undisputed that the petitioner tendered his resignation and that he applied at
Royale at the instance of Karen and Cesar and on the impression they created that
these were necessary for his continued employment. They orchestrated the
petitioner’s resignation from Sceptre and subsequent employment at Royale,
taking advantage of their ascendancy over the petitioner and the latter’s lack of
knowledge of his rights and the consequences of his actions. Furthermore, that the
petitioner was made to resign from Sceptre and apply with Royale only to be
unceremoniously terminated shortly thereafter leads to the ineluctable conclusion
that there was intent to violate the petitioner’s rights as an employee, particularly
his right to security of tenure. The respondents’ scheme reeks of bad faith and
fraud and compassionate justice dictates that Royale and Sceptre be merged as a
single entity, compelling Royale to credit and recognize the petitioner’s length of
service with Sceptre. The respondents cannot use the legal fiction of a separate
corporate personality for ends subversive of the policy and purpose behind its
creation53 or which could not have been intended by law to which it owed its
being.54
Also, Sceptre and Royale have the same principal place of business. As early as
October 14, 1994, Aida and Wilfredo became the owners of the property used by
Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they
executed with Roso.57 Royale, shortly after its incorporation, started to hold office
in the same property. These, the respondents failed to dispute.
The respondents do not likewise deny that Royale and Sceptre share the
same officers and employees. Karen assumed the dual role of Sceptre’s Operation
Manager and incorporator of Royale. With respect to the petitioner, even if he has
already resigned from Sceptre and has been employed by Royale, he was still
using the patches and agency cloths of Sceptre during his assignment at Highlight
Metal.
Royale also claimed a right to the cash bond which the petitioner posted
when he was still with Sceptre. If Sceptre and Royale are indeed separate entities,
Sceptre should have released the petitioner’s cash bond when he resigned and
Royale would have required the petitioner to post a new cash bond in its favor.
Taking the foregoing in conjunction with Aida’s control over Sceptre’s and
Royale’s business affairs, it is patent that Royale was a mere subterfuge for Aida.
Since a sole proprietorship does not have a separate and distinct personality from
that of the owner of the enterprise, the latter is personally liable. This is what she
sought to avoid but cannot prosper.
With respect to the petitioner’s backwages, this Court cannot subscribe to the
view that it should be limited to an amount equivalent to three (3) months of his
salary. Backwages is a remedy affording the employee a way to recover what he
has lost by reason of the unlawful dismissal.60 In awarding backwages, the
primordial consideration is the income that should have accrued to the employee
from the time that he was dismissed up to his reinstatement61 and the length of
service prior to his dismissal is definitely inconsequential.
Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their
full backwages, inclusive of allowances and other benefits or their monetary
equivalent, from the time their actual compensation was withheld on them up
to the time of their actual reinstatement.
Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiter's decision until the dismissed
employee is actually reinstated. But if, as in this case, reinstatement is no
longer possible, this Court has consistently ruled that backwages shall be
computed from the time of illegal dismissal until the date the decision
becomes final.65 (citation omitted)
In fine, this Court holds Royale liable to pay the petitioner backwages to be
computed from his dismissal on October 1, 2003 until the finality of this decision.
Nonetheless, the amount received by the petitioner from the respondents in
satisfaction of the November 30, 2005 Decision shall be deducted accordingly.
a) full backwages and other benefits computed from October 1, 2003 (the
date Royale illegally dismissed the petitioner) until the finality of this
decision;
b) separation pay computed from April 1976 until the finality of this decision at
the rate of one month pay per year of service;
c) ten percent (10%) attorney’s fees based on the total amount of the
awards under (a) and (b) above;
This case is REMANDED to the labor arbiter for computation of the separation
pay, backwages, and other monetary awards due the petitioner.
SO ORDERED.